Mortgage rates are dropping fast after a shock jobs report

Good mornin'. Busy week ahead. Let's get to it. Today's newsletter is a 2-minute read.

1. Job gains slow, unemployment rate hits 3.9%

Job growth slowed by more than expected and the unemployment rate rose to an almost two-year high of 3.9%, indicating that employers’ strong demand for workers is beginning to cool.

Nonfarm payrolls increased by 150,000 in October following downward revisions to the prior two months, a Bureau of Labor Statistics report showed Friday. Monthly wage growth slowed.

From a sector standpoint, healthcare led with 58,000 new jobs. Other leading gainers included government (51,000), construction (23,000), and social assistance (19,000).

The Fed uses jobs data as one component of its inflation watch. Following Friday’s jobs data, markets further reduced the probability of a rate hike in December to just 10%, according to a CME Group gauge.

2. Jobs report connection to mortgage rates dropping

The yield on 10-year Treasury notes, closely linked to mortgage rates, fell sharply by nearly 20 basis points after the unemployment rate was reported at 3.9% for October.

This brought the Treasury yield down to a low not seen since September, with mortgage rates dropping correspondingly. Rates for 30-year fixed mortgages have fallen to 7.38%, a considerable decline from the year's high.

This trend is part of a series of reductions over the past week, suggesting a shift in the economic landscape that could influence real estate and lending markets.

3. Lenders and brokers shed 7,000 positions

Nonbank mortgage lenders and brokers collectively shed more than 7,000 positions between August and September entering into seasonally weaker months, according to Bureau of Labor Statistics estimates.

Job numbers in these employment categories fell to 331,300 from 338,400 during the period.

Industry employment was last this low in June 2020. Broker job numbers have been slightly more resilient than positions at lenders in recent months, but both categories fell in September.

4. Catch up quick

🔐 Why homebuyers may want to lock in a rate this week. (Redfin)

💰 Big landlords are colluding to raise rents, D.C. lawsuit alleges. (Axios)

🤖 Elon Musk debuts Grok AI bot to rival ChatGPT and others. (CNBC)

5. Rocket reports rising profit

With a new CEO at the helm, Rocket Companies reported a net income, or profit, of $115 million on $1.2 billion in total revenue during the quarter that ended Sept. 30.

It was the firm's second straight quarter of narrow profits after back-to-back losses in the first quarter of this year and the fourth quarter of 2022.

Still, the company's profitability lags far behind last year's performance. Year-to-date, Rocket has reported a loss of $157 million, compared to a profit of nearly $1.2 billion over the same time period last year.

6. The 10 least expensive cities based on price per sqft

These are the 10 least expensive cities in the U.S. based on the price per square foot.

Southern and Midwestern states tend to really shine in this regard. Despite home prices increasing across the country, these regions are still typically cheaper than their Northeastern and Western counterparts.

For comparison, the median price per square foot nationally is $232.

Source: HomeBay

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